The good news for dealers is that Daihatsu Deutschland does not plan to reduce the ranks of its 330 dealers, half of which work exclusively with the Japanese carmaker. Instead, it hopes expand to 350-400 dealers by filling "those holes on the Daihatsu map, such as in Schleswig-Holstein, Mecklenburg-Vorpommern and Bavaria," said Ralf Cremer, division manager for marketing, public relations and customer services at the launch of the new Cuore small passenger car.

The bad news is that the Japanese manufacturer's subsidiary in Germany, which had a turnover of 87 million euros in 2002, plans to cut dealers' margins.

It has been suggested that margins, which currently range between 16 percent and 18 percent depending on the model, will be reduced to between 13 percent and 13.5 percent under the new contracts tied to changes in the European block exemption rules that take effect on October 1.

Performance-related bonuses will be added but the importer hasn't made any firm commitments yet. Such payments will be linked to investment by dealers in staff training, levels of sales staffing and expansion of showrooms.

"Quality is a major point within the new contracts," Cremer said. "A dealer who invests more will be rewarded accordingly."

The dealers' association wonders if selling Daihatsu vehicles will continue to be profitable since margins are already small on low-priced cars. The current Cuore, which made up half of the total of 7,400 Daihatsu models sold in Germany in 2002, is priced from 7,660 euros. In addition, interest rate offers eat into dealer margins by 4 percent or 5 percent.

Daihatsu believes that the new Cuore, which will be available from May, will have a positive effect on dealer profits, despite the new margin system. The small passenger car, approximately three-and-a-half meters long with 58hp, was developed by Daihatsu in Osaka, Japan, in cooperation with engineers from the Austrian company Magna Steyr. The Japanese manufacturer believes that the car's design and technology will appeal to the European market.

According Cremer, the Cuore has been designed especially "for women, women and women."

The importer hopes to sell 500 Cuores per month in Germany, making a total of 4,000 vehicles during the remaining eight months of 2003. Prices for the Sixth-generation car start from 7,795 euros, which is slightly more expensive than its predecessor. The sales target for 2004 is 9,000 units.

Cremer's optimistic sales forecast is influenced by the model's success in Japan. Since its market launch at the end of 2002, sales have increased to 23,000 cars by March 2003. Only 8,000 units of the old Curore were sold during its last year of production.

The new Cuore will be launched onto the German market with a major advertising campaign. Dealers will receive a tape with an advertisement to be shown in local cinemas. The importer will pay 50% of the transmission fees. Daihatsu Deutschland will also supply its dealers with posters, advertisements for the local press and fliers for daily newspapers.

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